BRRRR - Buy, Rehab, Rent, Refinance, Repeat
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
Updated about 15 hours ago on . Most recent reply
First buy-thoughts on COC return
Hello, I'm considering my first buy approximately $150,000 using BRRRR method. Out of pocket down is approximately $30k. House is turnkey and ready to rent. Based on the BRRRR calculator, I'm sure between 6% and 7% cash on cash return . Compared to the 10 year average of the S&P 500, It's a few points lower. The numbers are conservative. My attraction to this property is turnkey as this is my first purchase. Area is very stable. Long-term rentals are in high demand. Does anyone have a point of view on cash on cash return for the first ? I know there are a higher cash on cash returns but requires lots of renovation and I'm still working to build a contractor team.
This potential buy gets me in the game with a solid investment.
Thoughts?
Most Popular Reply
@William Montalto how are you figuring cash on cash? New investors typically have no idea how much the true expenses are to hold rentals. If you leave out or underestimate; property management, vacancy rate, turnover cost, capital expenses, repairs and maintenance your numbers can be way off.
Cash on cash is only one way to evaluate a deal. I might take low cash on cash if I can buy with lots of equity. Also consider mortgage paydown and the advantage of leverage when figuring appreciation.
All that said I would think that COC return is low for me. However I suspect it is in line with what is commonly out there today.